ABC Ltd have issued a bond with a $1,000 face value and 8%pa coupons paid semiannually (ie 4% each 6 months) and three years to maturity. XYZ Ltd has also issued a bond with $1,000 face value and 8%pa coupons paid semi-annually, but with a maturity of twenty years. Yields are currently at 8% with both bonds selling at par.

(i) What is the current value of both these bonds?

(ii) What is the value of each of these bonds if yields rise to 10%?

(iii) What is the percentage change in value for each of these bonds if yields rise rom 8% to 10%?

(iv) What is the value of each of these bonds if yields fall to 6%?

(v) What is the percentage change in value for each of these bonds if yields fall from 8% to 6%?